Tag Archives: energy private equity

Some publicly-traded U.S. energy pipeline and oil-storage partnerships are restructuring into simpler business models to help attract new investors and spur growth.

Rising oil and gas production has spawned billions of dollars of new transport, gathering and storage projects. But the companies most responsible for these projects can allocate up to 50 percent of their income to the general partner, leaving less for other holders or to invest in new projects.

Historically, these firms have passed most of their income along to holders and sold equity or debt to finance new projects or acquisitions. But in the last year, what they have had to offer investors has jumped. MPLX Energy Logistics LP, for instance, paid a 9.7 percent annualized distribution last quarter to its holders, up from 7.9 percent a year earlier, according to figures from investment firm East Daley Capital Advisors.

“The higher cash yield makes the economics of these projects a little tougher,” said Kendrick Rhea, an analyst at East Daley Capital. He estimates the cost of equity has risen nearly a third for some companies in the last year.

Wells Fargo (WFC.N) and a number of other lenders are negotiating to take control of a hedge fund previously valued at more than $2 billion that is now worth close to nothing, according to a report from the Wall Street Journal.EnerVest Ltd., a Houston private equity firm that focuses on energy investments, manages the private equity fund that focused on oil investments. The fund will leave clients, including major pensions, endowments and charitable foundations, with at most pennies on the dollar, WSJ reported.The firm raised and started investing money beginning in 2013 when oil was trading at around $90 a barrel and added $1.3 billion of borrowed money to boost its buying power. West Texas Intermediate crude prices closed at $46.54 a barrel on Friday.

Lime Rock, a Houston-based private equity firm focused on energy, has closed its latest fund with $754 million in aggregate capital commitments.The Lime Rock Resources team will use the fund to acquire, improve and directly operate producing oil and gas properties in the U.S.

In addition to four Lime Rock Resources funds, Lime Rock also has raised six Lime Rock Partners funds since 1998, according to its website.

The funding process for Lime Rock Resources IV launched in November. Lime Rock Resources III, which closed in October 2013, raised $750 million. Since the Lime Rock Resources funds’ inception in 2005, the have made 23 major acquisitions in U.S. basins, primarily in Texas, Oklahoma, New Mexico and North Dakota.